Super Coffee has closed a $106 million Series C fundraising round, the company confirmed today.
The round was led by Maryland-based venture group Durable Capital Partners and included participation by beverage industry veteran Clayton Christopher and former Peet’s Coffee CEO Dave Burwick, as well as another tranche from existing investor and distribution partner Anheuser-Busch InBev (AB InBev).
After pitching “close to 50” investors since starting the process in March, CEO Jim DeCicco said the company connected with Durable Capital Partners’ founder and managing partner Henry Ellenbogen through a member of its board. Though most of its portfolio is outside of CPG, Durable has recently made significant investments in food and beverage, including salad chain Sweetgreen ($156 million) and Boston Beer Company. Through the group’s connection with the latter brand, Ellenbourg helped connect DeCicco with its CEO, Dave Burwick, the former head at Peet’s Coffee.
Texas-based Super Coffee, which recently relocated from New York City to Austin, also has a pair of new locally based investors in Clayton Christopher and Doss Cunningham, chairman and CEO of supplement brand and C4 Energy parent company Nutrabolt, who invested through family fund LivWell Ventures.
After initially seeking $70 million on a $430 million pre-money valuation, the round closed at $106 million. Around $30 million will go towards cashing out the company’s first 20 investors, composed of friends and family, DeCicco said.
Since launching in 2015, Super Coffee has emerged as a fast-rising challenger to established RTD coffee giants in Starbucks and Dunkin’, while also picking up consumers seeking alternative energy and protein drink options. The brand signed a master distribution pact with AB InBev last June as part of a $25 million funding round led by Skyview Capital. Currently marketing formats ranging from cans to multiserve bottles to K-Cups and packaged coffee (plus a line of creamers), the company is on pace for $100 million in sales for the full calendar year, DeCicco said.
The new financing will help fuel Super Coffee’s ambitions to push beyond grocery retail, which accounts for around 60% of the business. That segment helped insulate the brand from slowdowns in c-stores, but with that channel representing nearly half of all RTD coffee sales, DeCicco noted that convenience is its next target. Backing those efforts is 7-Eleven, which invested $2 million through its 7-11 Ventures division and is rolling out four SKUs in cans and bottles to stores nationwide this month.
Behind the scenes, DeCicco said Super Coffee will continue to support its partnership with AB. The brand’s ACV on its highest-selling SKUs is only around 40%, less than half of what high-sugar rivals Starbucks and Dunkin’ can claim, so “we have a lot to build out” in terms of distribution and incentivizing wholesales, he added. But with no new innovation outside of seasonal LTOs until 2023, Super Coffee will seek to pump up brand awareness, hovering around 2% nationally. Bringing on Chad Portas, former chief creative officer at Bai, is part of that effort, with the bigger target being this year’s Super Bowl LVI at SoFi Stadium in Los Angeles. De Cicco said Super Coffee will have a large on-the-ground presence at the event — the idea is to “own” the post-game morning occasion of 6 a.m. to noon, he noted — in support of AB, which is planning to blow out its previous record-high advertising budget for the big game by more than double.
The new funding solidifies Super Coffee’s position as a direct challenger to Starbucks and Dunkin’, said James Watson, Executive Director of Beverage Research at Rabobank. The brand’s low calorie, protein-added formula gives it a unique better-for-you positioning within traditional RTD coffees, but its cross-over into the broader energy space has the most potential to open up the c-store channel, where hybrid products from Monster and Forto have carved out a foothold, he noted.
Yet while Coca-Cola and Pepsi maintain their legacy brands, most of the category innovation has been fueled by beer companies like AB and Molson Coors, the latter a distribution partner for La Colombe’s RTD lattes. The fact that AB reinvested in this most recent round underlines their ambitions in the coffee space, Watson said.
“For beer companies looking outside of beer, they want the c-store,” he said. “You want a brand that travels well in all the same places that beer does, and that’s what this drink does. Distributors are going to love having it.”